For the shale revolution, we can thank ‘petropreneurs’ not government energy polic

From Mark Perry.

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Below is an excerpt of my op-ed in today’s Investor’s Business Daily “No Energy Policy Has Been A Blessing For Shale Boom“:

The shale revolution happened not as a result of government mandates, regulatory pressure or taxpayer subsidies. Rather, it came about primarily due to innovation, entrepreneurial problem-solving and the marketplace, with some early government assistance in developing the technology for fracking and horizontal drilling.

The shale revolution is not only driving economic growth and putting millions of Americans to work but also providing elegant and efficient solutions to problems like foreign-oil dependence that policymakers couldn’t solve.

Since the oil crises of the 1970s, one U.S. president after another has lamented our energy insecurity and pledged to take action. And yet, our dependence on foreign fuel steadily grew and hit a peak in 2005 of 60.3% of U.S. petroleum products consumed that year. But the shale revolution changed all that. Surging oil production from the Bakken in North Dakota, the Eagle Ford and Permian Basin in Texas and other shale plays has reduced the nation’s dependence on foreign oil to below 28% this year — the lowest in almost 30 years (see chart above).

Clearly, no industry has done more to get America back on its feet in the wake of the Great Recession than the oil and gas industry. Shale-energy production, almost nonexistent a decade ago, now supports 2 million jobs and could support 3.3 million by 2020. And the benefits aren’t only economic. Abundant, low-cost natural gas is reshaping our electricity mix and driving a significant reduction in carbon emissions. As recently as 2005, coal generated 60% of the nation’s electricity. But today, that figure has fallen to just over 40% as utilities turn to gas. Because gas generates just half of coal’s carbon emissions when burned to generate electricity, emissions fell in 2012 to their lowest since 1994, before edging slightly higher last year.

Where bureaucracy has failed, where clumsy government action has often done more harm than good, market solutions and “Made in the USA” technologies like hydraulic fracturing that gave birth to the shale revolution have succeeded with flying colors.

Yet, the Obama administration continues to promote renewable energy sources while largely ignoring fossil fuels and nuclear power. It’s as if the administration can’t bear to acknowledge the lessons of the shale revolution, arguably one the most remarkable energy success stories in U.S. history.

We need less interference in the energy marketplace, not more. Government policy shouldn’t favor one technology or energy source over another. We don’t need federal policies to spur competition and innovation. Let’s learn some lessons from the Great American Shale Revolution and let entrepreneurs, not bureaucrats, get us there.

MP: As my former AEI colleague commented a few years ago, “One overlooked aspect of the current technology-driven fossil fuel energy boom going on in the U.S. right now is that if Washington had any premonition it was going to happen, they would surely have done something to stop it.”

And as Gregory Zuckerman pointed out in his excellent book The Frackers, “A group of frackers, relying on markets cures rather than government direction, achieved dramatic advances by focusing on fossil fuels of all things. It’s a stark reminder that breakthroughs in the business world usually are achieved through incremental advances, often in the face of deep skepticism, rather than government-inspired eureka moments.”"